Malawi should emulate the Rwandan touch for stimulating private investment

Quotation

“Faith consists in believing when it is beyond the power of reason to believe. “ – Voltaire

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“The Rwandan Miracle” is something that will, perchance, go down in history as one of the wonders of the world when it comes to how a country can move from a state of hopelessness to being a role model in how to spur economic development. Of course, prior to the collapse of world coffee prices in the 1980s and the 5-year ethnic cleansing-based civil war that ended in 1994 when over 800,000 people were brutally murdered in the Rwandan Genocide, the country had showed much potential for growth.

However, after the harrowing war, the future of the country was in doubt as its past and threat of war and violence cast a heavy shadow over the country. It took radical concerted efforts from the political establishment under President Paul Kagame, the assistance of bilateral and multilateral development partners, well-wishers and the infallible will of the Rwandese – both local and those in diaspora – to bring about the marvel that is Rwanda today.

Presidene Banda:Beckon investors to come to malawi to invest in differents fields

There are some striking similarities between Rwanda and Malawi. Both countries are small, have over 70% of their people in rural areas with a high population density, are dependent on agriculture, are landlocked with, ostensibly, few mineral resources. The level of industry is minimal and there is heavy dependence on one or two crops, tobacco in the case of Malawi and coffee and tea in Rwanda. Rwanda can, therefore, serve as a proxy for Malawi and it’s successful progress toward recovery and growth can easily be adapted to our circumstances.

Malawi recently launched MDGS II and an Economic Recovery Plan whose overriding purpose is to resuscitate and transform the economy following years of neglect and lack of resolve. The plan rests on the premise of increased production and stimulation of the export-oriented sector particularly agriculture, fisheries, forestry, mining and tourism. Inevitably, this will entail creation of a business-friendly environment in order to attract Foreign Direct Investment (FDI) and motivate private sector investment.

Rwanda’s miraculous recovery and growth has been underpinned by an unflinching commitment to make the country a premier investment destination.  This has entailed removing bottlenecks and red-tape and enabling “killer applications” to make it easier to do business. This has also involved revamping, simplifying and harmonizing multiple layers of legislation to create the right investment environment.

President Mrs. Joyce Banda has undertaken to make Malawi one of the top 100 countries under the World Bank’s “Ease of Doing Business” index within two years. Some commentators have said that this is an over-ambitious target considering that Malawi currently stands at 145 out of 183 surveyed economies, down 4 places from its 2011 ranking. However, from the Rwanda experience, it is conceivable that we can do even better if all stakeholders commit to the dream. Coincidentally, Rwanda is ranked 45; if we subtract this from Malawi’s 145, the result is JB’s desired minimum ranking of 100.

 Malawi vs. Rwanda, Doing Business, 2012

 

Component Malawi Rwanda
Starting a Business 139 8
Dealing with Construction Permits 167 84
Getting Electricity 177 50
Registering Property 95 61
Getting Credit 126 8
Protecting Investors 79 29
Paying Taxes 23 19
Trading Across Borders 164 155
Enforcing Contracts 121 39
Resolving Insolvency 132 165
Overall Ranking (out of 183 countries) 145 45

Comparison of Rankings (out of 183 countries) on Key Areas

        on World Bank’s “Ease of Doing Business,” 2012

 

It is clear from the comparative rankings that Malawi needs to implement radical reforms and focus on improving on the ten critical areas. Rwanda has done so well that it is now acknowledged as:-

  • the 2nd most reformed country in the World, over six years, after Georgia (2005-2011).
  • 45th on the overall list of 183, up 13 positions from 58th last year.
  •  the 3rd easiest to do business in Africa after Mauritius, and South Africa. It takes 1-day to start a business compared to an average of 45-days for Africa and 13-days for the rich countries!
  •  the easiest country to do business in East Africa.

Rwanda’s efforts to make it easier to do business have resulted in significant FDI flows and partnerships between local and foreign investors. Consequently, the country has recorded remarkable growth rates of between 5.5% and 8% per annum over the past 5 years. In the process, the country has benefitted from infrastructural development, diversification of the economic base, increased ICT penetration, technological and skills transfers and human capacity development that will provide a platform for further future growth.

Malawi should learn from Rwanda and emulate its shining example. Let us appreciate the processes and practices that have led their success and customise them to our needs and situation, Quickly!; we don’t have to re-invent the wheel.

Rwanda has proved that it is possible to overcome an apparently hopeless situation and create a better future. Malawi is currently in dire circumstances but blessed that there has been no war, tragedy, economic, political and social upheaval on the scale that Rwanda experienced. In fact, one wonders why after 48 years of relative peace and tranquillity, our country has failed to develop whilst some countries that have been though nightmarish years of turmoil, like Rwanda and Mozambique and some late-adopters of capitalism like our newly discovered nemesis, Tanzania have somehow surpassed us. What is wrong with us? We need some serious soul-searching to understand what really holds us back and why we continue to engage in self-defeating, self-destructive behaviour.

Malawi is a distressed nation and “Desperate situations require desperate measures.” Therefore, all stakeholders need to understand the urgency and need to solve our problems and to tirelessly work together to ensure that Malawi does indeed become one of the top 100 investment destinations in the world on its way to economic recovery. Indeed, a better Malawi is possible. It is doable.

Even though it is no laughing matter, I would wish to pose a question in the purported, ever-hilarious Idi Aminisque style: “If Rwanda can did it, why can’t we did it too?!”

 E-mail: [email protected]

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